In a direct challenge to government regulations that prohibit financial institutions from branching across state lines, the city's largest savings and loan institution is seeking to open a new office in suburban Maryland.

Perpetual Federal of Washington, in an application filed last Friday with the Federal Home Loan Bank of Atlanta, proposed a new branch at Russell and Odend'hal Avenues, adjacent to the Lakeforest Mall under construction outside Gaithersburg.

The move by Perpetual opens even wider an existing, bitter dispute over branching among area thrift institution and government leaders.

Columbia Federal, another Washington-based S&L, ignited the controversy 2 1/2 years ago by seeking to open a branch in Montgomery Mall. Although hearings on that application were held in Atlanta in May 1976, the Federal Home Loan Bank Board in Washington has yet to make a decision.

Maryland-based S&Ls opposed Columbia and some suburban S&L leaders viewed the new Perpetual application as an attempt to bring the issue to a head. Thomas Owen, the president of Perpetual, agreed with that assessment yesterday.

The FHLBB, Owen said in an interview, . . . "has . . . procrastinated . . . too long . . . we don't want to leave this on the back burner."

In the interview and in his firm's application for the Gaithersburg branch, Owen's major arguments in favor of the new facility included the following:

"Washington is a federal enclave and the state prohibition (on branching) should not apply," with only 26 square miles of land privately owned, far less than any state.

By continuing to prohibit Washington S&Ls from tapping the suburban markets, where area population has grown in recent decades compared with a decline in the city, the government "unfairly restricts the ability of associations to effectively serve their suburban customers in the areas where they live."

Perpetual played a key role, along with other city-based S&Ls, in financing suburban residential development "and its customers in the area are entitled to the conveniences that we now propose."

With assets of $963 million on Dec. 31. Perpetual is by far the largest S&L in metropolitan Washington and 50th largest in the nation. But, Owen noted, while Perpetual cannot grow outside the D.C. borders the 52nd largest S&L - Loyola Federal of Baltimore - is expanding throughout its suburds and has asked permission to open a new Silver Spring branch.

Interstate branching of S&Ls ended in the 1930s when the federal government said it would honor state policies and Maryland acted to prohibit future branching in the state from associations not based there.

But Maryland permitted existing interstate branches to remain and Perpetual has continued to operate branches in Bethesda, Silver Spring, Hyattsville and District Heights under that "grandfather" policy.

Perpetual also has five branches in the city and plans four new offices in the next year - at 18th Street and Columbia Road NW, Connecticut Avenue and L Street NW, Wisconsin Avenue and Warren Street NW and on Georgia Avenue near the Walter Reed medical center.

"Washington needs the help of strong financial institutions for its urban construction and rehabilitation programs. The bank board and the administration have sought to encourage participation by S&Ls in the solution of urban problems," an initiative Owen said he supports.

But since D.C S&L deposit growth is below that of suburban S&Ls by a "substantial" margin, the city institutions do not have adequate resources, Owen argued.

Suburban S&L leaders are not expected to be convinced by Owen's arguments, however.

T. Hammond Welsh Jr., president of Maryland Federal, said yesterday he expects to be among opponents of the proposal. A "long-standing policy."should not be changed, said Welsh, whose S&L has assets of $319 million at 11 offices in Montgomery, Prince George's and Charles counties!

Welsh said he did not object to expansion in his market by Loyola of Baltimore, however, because "it is a Maryland-oriented institution."

Owen countered that Perpetual could make a similar claim, noting that some 51 percent of his S&L's deposits come from suburban Maryland residents. But Owen said Perpetual has no desire to switch its charter and become a Maryland institution, a course followed previously by formerly D.C.-based S&Ls.